What is the 'Malthouse Compromise' to prevent a no-deal Brexit in March?

By Aubrey Allegretti, political reporter

Theresa May is considering a new plan to help her solve the parliamentary deadlock over Brexit.

Its creation has been credited to Kit Malthouse, the housing minister, to unify the warring wings of the Conservative Party,and came about after peace talks between senior Leavers such as the Brexiteer ringleader Jacob Rees-Mogg and Europhile former minister Nicky Morgan.

Image:Housing minister Kit Malthouse brokered the proposal

Endorsed by Tory Brexiteers and Remainers, it is therefore known as the "Malthouse Compromise".

There are two parts to it: Plan A, for how the UK will leave the EU with a deal, and plan B for how it will leave with a no-deal.

Downing Street has already set up a working group to examine its proposals, but the EU has ruled out changing the current deal.

Plan A would see the UK formally request two major changes to the withdrawal agreement struck with Brussels in November.

The first is asking to extend the transition period by one year - the temporary bridge between Brexit and the start of a new trade agreement.

Under the current deal it is due to last until the end of 2020.

But the Malthouse Compromise suggests delaying that until 2021, with the UK paying in more money, but allowing more time for a trade deal to be struck before the transition period ends.

The second is asking to change the backstop - the insurance policy that kicks in to prevent a physical border reforming on the island of Ireland if no trade deal is struck by the time the transition period runs out.

It could be changed, the plan says, to become a "basic free trade agreement" - a slimmed-down version of the full future relationship treaty.

Image:Theresa May said she was 'engaging positively' with the plan.

Plan B would see the UK accept that a deal will not be struck by 29 March.

It would ask the EU to honour the transition period anyway - keeping the UK subject to law created in Brussels without representation in its institutions - but again for a year longer than planned.

Brexit will still have happened, but a standstill in the relationship will give more time to prepare for the implications of a no-deal divorce.

Crucially, the promise of citizens' rights being protected would remain.